Chip tester King Yuan Electronics Co (京元電子), which counts Nvidia Corp as its key customer, yesterday said it planned to spend a record NT$23.3 billion (US$712 million) on new facilities and equipment next year to catch up with rapidly growing testing service demand for chips used in artificial intelligence (AI) and high-performance computing (HPC).
The capital expenditures represent a surge of 68 percent compared with NT$13.8 billion this year.
Seventy percent of the spending would be allocated for the purchase of final chip testing equipment and related tools such as test handlers, the company said in a statement after its board of directors approved the annual capital spending.
Photo: Bloomberg
“As customers’ pressing demand for AI and HPC chip testing services grow fast, the company is striving to expand capacity quickly, allowing customers to launch new products soon,” King Yuan said.
To finance the facility and equipment spending, the board yesterday also gave the go-ahead to arrange a syndicated loan of NT$14 billion from First Commercial Bank (第一銀行), the company said in a separate statement.
King Yuan is adding new testing equipment and expanding capacity as Nvidia’s Blackwell GB200 chip enters volume production this quarter, and the new GB300 chip is in the pipeline. As chip design and chip manufacturing become more complicated, longer final testing processes are needed to ensure that chips meet functionality, reliability and quality requirements, the company said.
To cope with the sharp rise in demand, King Yuan said it has rented a factory shell in Miaoli County’s Toufen City (頭份) and is building a clean room and preparing for new equipment to move in.
It usually takes at least one year to complete construction, it said.
The company operates two fabs in Miaoli’s Jhunan (竹南) and Tongluo (銅鑼) townships.
The record-breaking capital spending came as the company expressed a bullish outlook about next year’s revenue growth, driven by the AI boom.
King Yuan said next year would be a “good year,” with revenue and gross margin likely to rise to an all-time high.
The growth would be mostly driven by AI applications, it said.
Other applications including chips used in smartphones, automobiles and industrial devices would be flat, it said.
The company reported an annual growth of 11 percent in revenue to NT$19.56 billion in the first three quarters of this year, compared with NT$17.65 billion in the same period last year. Gross margin rose to 34.82 percent from 32.97 percent a year earlier.
Net profit soared about 35 percent to NT$5.75 billion during the January-to-September period, compared with NT$4.27 billion a year earlier.
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